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New Year Republican Double Talk Persists

January 2, 2011

Paul Krugman starts the New Year with a giant reality check: the trade off for nearly $2 trillion in tax cuts for the wealthy will result in Republicans calling for program cuts to offset the costs to the deficit over the next two years. The majority of the $2 trillion added to the deficit breaks down as $800 billion per year for the wealthiest Americans. Republicans claim those tax cuts do not have to be offset, but Krugman has revealed their weasel ways:

For example, Senator Jon Kyl of Arizona — who had denounced President Obama for running deficits — declared that “you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans.”

It’s an easy position to ridicule. After all, if you never have to offset the cost of tax cuts, why not just eliminate taxes altogether? But the joke’s on us because while this kind of magical thinking may not yet be the law of the land, it’s about to become part of the rules governing legislation in the House of Representatives.

As the Center on Budget and Policy Priorities points out, the incoming House majority plans to make changes in the “pay-as-you-go” rules — rules that are supposed to enforce responsible budgeting — that effectively implement Mr. Kyl’s principle. Spending increases will have to be offset, but revenue losses from tax cuts won’t. Oh, and revenue increases, even if they come from the elimination of tax loopholes, won’t count either: any spending increase must be offset by spending cuts elsewhere; it can’t be paid for with additional taxes.

So if taxes don’t matter, does the incoming majority have a realistic plan to cut spending? Of course not. Republicans say that they want to cut $100 billion in spending, which is itself small change in a $3.6 trillion federal budget. But they also say that defense, Medicare and Social Security — all the big-ticket items — are off the table. So they’re talking about a 20 percent cut in what’s left, which includes things like running the judicial system and operating the Centers for Disease Control and Prevention; they have offered no specifics about where the cuts will fall.

Whenever will Americans realize the games elected officials are playing with their money and their future. In the worst economic downturn since the Great Depression we have Republicans who heavily lobbied for extending the Bush tax cut. Now why on god’s green Earth would they do such a thing? Why add $2 trillion directly to the deficit when they were calling for a reduction of the $13 trillion deficit for eleven of the twelve months of 2010? It’s simple really. The Republicans are the lapdogs for the wealthy. They directly benefit by receiving campaign donations. It is a circle of unending corruption. They say one thing and do another. State governments could use Federal assistance to avoid defaulting on trillions in municipal bonds, but instead of tending to the business of providing solutions that would help the states and thereby save millions of government jobs, the Republicans pushed for extending the Bush tax cuts. The municipal bond problem is severe and will rear its ugly head very soon. It may be THE single largest challenge our nation’s states will face this year. When State programs are slashed, millions laid off, and the pensions cutback, there will be outrage…. and somewhere down the line, that outrage will turn to real rage as people realize Republicans will not vote for another TARP or bailout, or whatever you want to call it, for the states. We cannot avoid this train wreck.

Krugman illustrates his point with reality and not some mumbo jumbo:

How will this all end? I have seen the future, and it’s on Long Island, where I grew up.

Nassau County — the part of Long Island that directly abuts New York City — is one of the wealthiest counties in America and has an unemployment rate well below the national average. So it should be weathering the economic storm better than most places.

But a year ago, in one of the first major Tea Party victories, the county elected a new executive who railed against budget deficits and promised both to cut taxes and to balance the budget. The tax cuts happened; the promised spending cuts didn’t. And now the county is in fiscal crisis.

Now the federal government has a lot more flexibility than a county government: it needn’t, and shouldn’t, balance its budget each year. The deficits of the past two years have actually been a good thing, helping to support the economy in the aftermath of the 2008 financial crisis.

But Nassau County shows how easily responsible government can collapse in this country, now that one of our major parties believes in budget magic. All it takes is disgruntled voters who don’t know what’s at stake — and we have plenty of those. Banana republic, here we come.

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